Trends in Long-Term Care - U.S. Senate Special Committee on Aging

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However, there are very few, from my exam<strong>in</strong>ation of the records,
there are very few efficiency bonuses entered, and they simply do not
exist that often, to really actively act as a control on the system.
However, they certa<strong>in</strong>ly do exist, and they are a bonus, for the
honest operator, who wants to make a good decent liv<strong>in</strong>g out of runn<strong>in</strong>g
his nurs<strong>in</strong>g home <strong>in</strong> a proper way, and they certa<strong>in</strong>ly are work<strong>in</strong>g
for those <strong>in</strong>dividuals.
Senator Moss. You talked about the real property, about the difference
between non-arm's-length and arm's-length, and so forth.
Rather than use the formula for that, is there any <strong>in</strong>centive there
to have the value of that real estate, to give you greater return?
Mr. MOAN. Yes. Clearly, it wvill. It will <strong>in</strong> two circumstances, if you
have a sale of the property, if you f<strong>in</strong>ally get out of the bus<strong>in</strong>ess, and
you sell it to someone else, that person can go <strong>in</strong>to the State department
of health and say the cost of the build<strong>in</strong>g is greater than you
are allow<strong>in</strong>g, I need an <strong>in</strong>crease, and I will show some figures on
that, but what is most important, is the fact that many of these, the
<strong>in</strong>flation that has occurred, occurred before the formula took effect,
and before these rents, before these rentals were calculated, or first
entered <strong>in</strong>to, so that the State started from an unusual base, a skewed
base, perhaps an unfair base for some of the operators, and allowed
some of them certa<strong>in</strong>ly a greater profit than should have been allowed.
I brought a chart with me, which I apologize for the complexity,
but it is essential to have that complexity to describe what is happen<strong>in</strong>g
<strong>in</strong> the system, and I would like to br<strong>in</strong>g that one out, when we go
for the reimbursement, for the real estate portion.
Senator Moss. All right. Let's proceed to that.
Mr. MOAN. This is a flow chart of one nurs<strong>in</strong>g home sales, leases, and
mortgages, from the years 1957, I believe, to the present.
In 1957, the <strong>in</strong>stitution, by the way, opened as a nurs<strong>in</strong>g home <strong>in</strong>
1960, but <strong>in</strong> 1957, we had the first sale that we recorded.
Now, we have a color code here, which I will expla<strong>in</strong>.
The color codes, the reds, are one <strong>in</strong>dividual owner, Ann Weiss.
The greens are companies which are owned by her husband, Bernard
Bergman, or are owned by herself, so these are all the greens, this
shade of green are Bergman companies.
These blues are owned by two <strong>in</strong>dividuals, Mr. Goldberg and Mr.
Farber, and these yellows are commercial lend<strong>in</strong>g <strong>in</strong>stitutions, with
the exception of those two over there.
Those were the previous owners of the build<strong>in</strong>g before it got <strong>in</strong>to
the nurs<strong>in</strong>g home <strong>in</strong>dustry.
The first sale that we have, we know the value of the build<strong>in</strong>g, when
it wvas sold, was less than $300,000.
We know its assessed value now is $212,000, and it could not have
been more than $300,000 dur<strong>in</strong>g that period of time.
In 1958, Ann Weiss sold the property to Ledge Realty Corp. Ledge
Realty Corp. is a Bergman corporation, and we have, we do not know
how much the sale was.
As far as Our records <strong>in</strong>dicate, it was a $10 transfer, so we do not
know what actual consideration passed.
The follow<strong>in</strong>g month, I believe it was the follow<strong>in</strong>g month-no, it
was the follow<strong>in</strong>g day, Ledge Realty Corp. sold it back to Ann Weiss.